Salaried Payroll

Riley · January 2003

I need some advice fast-

We switched our (exempt) employees to a bi-weekly(from semi-monthly) schedule starting Jan 1. We payed them the full 80 hours even though they only had four days in the pay period. The CEO now wants to cut their next paycheck to show for the "over payment" in hours. In short he wants to pay only for the four days on the last pay check instead of paying for all 80 hours.

My understanding is you cannot cut an exempt employees hours. They get paid x times a year with a total of x amount of salary. If we were to not pay them their full salary aren't we jeopordizing their exmempt status?

Thanks in advance!

LindaS · January 2003

My first thought is that there should not be a problem as long as it balances out in the end. By switching their pay period they were actually paid twice for 6 out of the 10 days in the pay period so by making the adjustment you are correcting an error and not "docking" their pay. At least that is what I am getting from your post.

Theresa Gegen TX · January 2003

Since these employees are exempt, they should be paid a weekly salary (not hourly). It is not the number of days in the pay period that counts. It is done on a weekly basis. If the pay period only encompassed one week, but the employees were paid for 2 weeks, you have overpaid them. But before deducting from their paychecks for the overpayment, you need to check your company policies, check your state law about paycheck deduction, see if the employees have signed a form allowing a deduction for overpayment, and communicate with the employees about how they will be paid and why. Do not just reduce the pay without talking to the employees.

Good Luck.

Pork · January 2003

Riley: Prior replys are correct, but I am confused. There are 52 weeks in a year. The Business year begins on X date. In our case the business year of 2003 began on Sunday, December 29, we pay salary based on number of weeks in a year. Regardless of the number of hours worked, if we started on Sunday December 29, 2002 and paid an exempt $300.00 gross that week and then decided to change to a bi-weekly system, we could start right now and we would pay a gross salary of $600.00 for the two week period, regardless of the number of hours worked in either of the past weeks. How could anyone even worry about the 80 hours or the adjusting for over payment. I suggest you first talk with your controller department head and find out on which Sunday did you start the new business year. It is either by "month" or "period" but I bet it is not based on any particular number of hours opened or closed. If it is by periods then there are 13 periods in a year 13 x 4= 52 weeks. There are 26 bi-weekly pay periods in a year. For exempts, we could care less about the number of hours worked or did not work. That is unless there is some other legal reason to be pro-rating a $600.00 bi-weekly pay period by the number of days actually worked. $600.00 devided by 10 pay pays is $60.00 per pay day, there still is no consideration of the numer of hours worked. I hope my $.05's worth is helpful. Pork

Riley · January 2003

[font size="1" color="#FF0000"]LAST EDITED ON 01-17-03 AT 10:17AM (CST)[/font][p]Thank you all for your advice. The Exempt empolyees are paid on 26 pay periods a year. The CEO was going off of hours worked. Which didn't make sense and angred many people at the feed yards because they show up at 7am and work every other week end as a regular schedule, not just 8 hours a day for five days a week.

The salaried employees were paid their final paycheck of 2002 on Dec 31. On Jan I we went to a bi-weekly, to put them on the same pay schedule as our hourly employees. We did this to be more efficient and are streamlining to outsource payroll in the future. The hourly payroll which is already biweekly ended on Saturday Jan 4th. So we picked up the salary, now biweekly, on the 8th when we cut checks. After I sent out the checks the CEO said we "overpaid" the salaried employees because they only worked 4 days. At first I agreed, but then I did some research and I tried to tell him we could not do this because salaried people do not go by hours, we go by pay periods. He still thought it was morally wrong to "pay ahead" these many days. I just don't think he understands the concept, which really scares me since he is the CEO and has been in the business for 15 years. He put out a memo, with my name on it, to all salaried employees stating we were going to reduce pay to make up for the days not worked. This really made yesterday a fun day for me. I am lucky I still have a butt after all the chewings I received. It finally took the controller and I had to explain to him what FLSA stated. I still don't think he believes us, but we got him to change his mind and retract the memo.

Thanks for all your help.
Riley

Salaried Payroll

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